Quote:
Fred,
I greatly respect you and your input, but everyone can't pay cash for their home. If they could then we would not be in this position.
Again as to why. People actually believed what the mortgage companies were telling them. That by the time the first rate increase would come along everyone would be making more money.
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Thanks Steve.
(the bribe was mailed today)
I guess I didn't word it correctly (normal).
I wasn't suggesting that anyone that can"t pay cash for their home shouldn't be buying.
But that people who can not put down 20%,at least,should wait until they can.And while they are saving up,to get their credit sorted out.
They have found that people that put down less than 20% are the most likely to default.Less invested,less to lose.
They end up with "piggyback mortgages" to make up the 20% and a lot of the lenders stopped requiring mortgage insurance on this same loans.The lenders figured that housing prices were rising so fast that they would be safe.
These people are accounting for 43% of the defaults.
They way I am suggesting is :
1.At least 20% down
2.fixed rate loan. 15 years if at all possible.
3.minimum debt or none before getting the mortgage
4.A monthly payment that is no more than 25% of your take home pay. The point in this is so you have some breathing room for those certain unexpected expenses.To beable save for the kid's college and your retirement.Plus being able to have a life.
One other thing,schools do a pretty good job of preparing people to make a good income. They don't do $hit in teaching people how to keep some of their income.